Impact of Institutional Pressures and Dynamic Capabilities on Sustainability Performance of Oil and Gas Sector

Abstract

Purpose – Globally, the oil and gas (OG) industries are under pressure from numerous stakeholders for their sustainable operations against the backdrop of climate change, ecological damage and social challenges. Drawing on the twin theoretical frameworks of the institutional theory and dynamic capability perspective, this study aims to examine the impact of the institutional pressures and dynamic capabilities on the overall sustainability performance of OG industry. Design/methodology/approach – This study uses survey method to analyze the responses from 275 middle management professionals of OG industry in India using partial least squares structural equation modeling. Further, focused group discussions with the select industry leaders validate the empirical findings of this study. Findings – The research reveals that both institutional pressures and firm’s dynamic capabilities have significant positive impact on its economic and environmental performances in OG sector in India. However, they do not have any impact on social performance, unlike earlier findings. Research limitations/implications – The main limitation of the study is generalizability of the findings, given the cross-sectional design of the study. Practical implications – Insights of this study will help regulators and policymakers in formulating effective regulatory and policy frameworks, besides creating awareness amongst the organizations to simultaneously focus on all the three aspects of sustainability performance. Originality/value – The research has bearing on policy formulation and creating a regulatory ecosystem to ensure overall sustainability performance of OG industry in India